Sarno v. Head to Toe Retail, Inc.

A-1875-97T3 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: November 30, 1998

EMPLOYER-EMPLOYEE—A multi-year vesting provision in a stock option agreement does not imply that the optionee has an equivalent multi-year employment contract.

A company’s president was fired and he sued seeking damages for wrongful termination of employment. He contended that he had a three year employment contract and was not subject to termination as an at will employee; that he had been terminated in bad faith in order to prevent his stock subscription from vesting; and that he was entitled to severance pay. Apparently, his assertion was that he had a three year contract was based upon a stock option plan that vested over a period of three years and pre-employment correspondence indicating that the company expected him to develop a budget and a three year plan. In addition, he argued that the express and implied terms of the stock option agreement were breached when “[t]he true reason for the termination was to deprive [him] of his stock vesting” in the company. Both the lower court and the Appellate Division disagreed with the complainant. The Court found that the agreement could only be read to condition vesting of his stock on his continued employment as of each relevant date. In addition, it did not feel there was anything to be inferred from the stock option agreement that would change his status from that of an at will employee, subject to discharge at any time for any reason. Lastly, the Court could find no factual proof even hinting that the president’s employment was terminated in order to prevent the stock subscription from vesting.